From the Editors

By Burt Solomon

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I grew up in a small house with a yard, a power mower, a used car, and a black-and-white television tuned every week to Leave It to Beaver and Father Knows Best. Then, it was clear what “middle class” meant. My immigrant grandparents had started with nothing, and it took two generations’ hard work for my parents to leave their row houses in Baltimore for tract housing just beyond the city line. Money wasn’t easy to come by, but we weren’t poor.

Thus, my family joined a rapidly expanding middle class that, in the wake of World War II, arguably turned this nation into the world’s dominant economic power. A consumer-driven market, a widening meritocracy hungry for new talent, a disciplined and usually satisfied workforce, an economic system conducive to democratic freedoms—a prosperous middle class has been the secret to (and the result of) all of this.

Now, it’s no longer clear what the middle-class idyll looks like. Many high earners don’t own a home—that totem of middle-classness—and many wage laborers have smartphones, that bourgeois essential. In reality, as we explore in these pages, possessions no longer suffice to define what it means to be middle class.

This special edition of National Journal is part of The Next Economy project, sponsored by Allstate and produced in collaboration with The Atlantic. It offers a comprehensive look at the state of the middle class in the wake of the Great Recession and an inert recovery. The story isn’t pretty, but it offers reasons to hope.

In the cover story, Amy Sullivan reports on a shift in the nature of the American Dream. As millions of people lost their homes, and multitudes of middle managers and union workers lost their jobs, Americans who had felt ensconced in the middle class learned they were only a pink slip or foreclosure away from a change in station. Middle-class Americans, she found, are thinking less nowadays about advancing and accumulating and more about just holding on to what they’ve got. A defensive sort of dream—and one that President Obama’s campaign advisers used to advantage last fall.

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This subtle but consequential shift in middle-class sentiment is borne out by our own polling. In examining the latest Allstate/National Journal Heartland Monitor Poll, Ronald Brownstein finds heightened concern about economic security—a fear of sliding out of the middle class—and widespread skepticism that any but the wealthy can send their children to college or save for retirement. Being middle class means “treading water,” says one respondent, a graduate student and pizza-delivery man in Washington state.

How daunting. So is Derek Thompson’s elegy for the “lost generation” of millennials, who have had the misfortune to emerge into the workforce while the economy is whimpering along and who may wind up paying for their poor timing—in lower earnings, fewer promotions—for the rest of their lives. The weaker the middle class, the weaker the economy in the long run.

But truly, there are grounds for optimism. Our 17-part Index of Middle-Class Well-Being finds that most of the vectors went south over the past dozen years, but a majority of them are now turning up. Sophie Quinton tells of the revolution in online education that could bring a college diploma within almost anyone’s reach. She also hunts up five innovative, proven—and replicable—solutions that are helping workers and businesses struggling to get ahead. Another source of hope comes from Alan S. Blinder, the former Federal Reserve Board vice chairman, who suggests in a Q&A that if and when the economy returns to full employment, the middle class’s troubles will ease.

And we have another, larger reason for optimism: the American character. As the good citizens around Boston just showed us again, Americans are resilient people, whose families were self-selected (unless they were Native Americans or African slaves) as ambitious, enterprising, often desperate immigrants who chose to leave homelands where the more timid stayed behind. Americans try harder when they have to, and sometimes when they don’t. This is what the terrorists have never understood: We fight back. Psychology counts.

It’s the national mood, as much as anything, that has been holding the economy and the middle class hostage. This sourness stops consumers from consuming, lenders from lending, investors from investing. All those graphs you puzzled over in Economics 101—supply and demand, inventory and prices, whatever—were simply expressions of mass psychology, an expectation of how groups of people will react in particular circumstances. In a wired, media-centric world, a nation’s psychology can change.

So, what will it take for the beleaguered middle class to thrive once again? It would help if the economy returns to full power, with investors, lenders, consumers, and employers acting in the economy’s best interests. And, if Americans keep believing that by getting an education and working hard, they’ll be able to buy a house with a yard and a power mower and a car or two—oh, and smartphones.